6 Keys To Success in Home-Performance Contracting

Originally published: 05.01.11 by
Robert Wilkos

Add this service now to boost sales and profits

Although home-performance
contracting isn’t a new trend
— it was introduced more
than a decade ago — it’s
still a relative “sleeper” business in our
industry, but it absolutely shouldn’t be!
The HVACR contractors who offer
this service will become the dominant
service providers in any given area.

Not
only will home-performance contracting
(HPC) differentiate you from the competition,
it will:

Increase revenue from the testing
fees and new work that in the past was not detected.

Boost profit margins due to the laborintensive
work of resolving comfort
issues, such as duct repair or duct system
replacement, or joint re-sealing.

Open the door to add other complementary
services such as insulation,
attic renovation, and crawlspace encapsulation.

Create happier homeowners and satisfied
customers.

Additionally, since performance testing
has recently been added to some state codes — as well as being incorporated
into national standards — expect
this service to become much more commonplace,
which means now is the time to get started.

I launched an HPC program when
I was business leader for Peaden Air
Conditioning, Heating & Plumbing in
Panama City, FL. We began discussions
about adding HPC in 2004, but our talks
didn’t result in any immediate decision.
But I was determined to add this service
and, by late 2007, we accomplished that
goal.

Our HPC business had led to a higher
closing ratio and increased our average
system

sale by $800; plus, there were
significant spikes in duct repair/replacement
revenues.
Adding the service definitely made us more competitive. A Panama City
competitor happened to call the same
consultant who sold us on this service,
and this competitor shared that Peaden’s
Comfort Diagnostic advertising had a
dramatic effect on the company’s overall
sales. Now, this competitor offers homeand
duct-performance service as well.

Keys to Our Success

Initially, our implementation focused
on these key items:

Choosing the right partner

Searching for qualified personnel

Practicing, practicing, and more
practicing

Having everyone, including all our
administrative staff, witness a home
and duct test

Establishing the initial pricing
strategy

Marketing

Choosing the right partner:Initially,
we had to determine which homeperformance
training entity to select, so some research and comparisons were
necessary. We considered two vendors —
Comfort Institute and National Comfort Institute. This was an important decision for
us, because a new relationship would be
established where time, effort, and money
would be invested. Prior to parting
with any money, I felt I needed to check
my commitment level and that of my
management team, because the success
of bringing in a new product and/or service
rested on our combined shoulders,
but mainly mine. After weighing both options, we chose Comfort Institute.

The next step was determining when
to pull the trigger. We circled September
2007 to finalize the deal, acquire the associated
hardware, and schedule the
training — which would allow us enough
time to practice this new service during
our off-season months.

Training:In our search for candidates
to send for training on this technology,
we looked in-house first. I sought, at
least, two employees to train (Never just
one! This means service can continue uninterrupted if one leaves.) and the
simple job requirements were that they
had to be physically able, computer literate,
and willing to learn something new.
We never had to advertise outside of our
company to find more people to send for
training on this cutting-edge technology.
Enough employees were interested from
the start.

Practice:To make certain we had the
correct process in place, we tested in our own homes — dozens of them. Like the
lawn-care provider with the tallest grass
in the neighborhood, my home had the
most air leakage. Our employees also
learned a lot about air leakage within
their own homes, and saw the benefits of
offering this service.

Determining air leakage is exactly
what this equipment and diagnosis uncovers,
especially when an infrared camera
is used in conjunction with the test.
I strongly recommend the purchase of a thermal-imaging camera — a must-have
item as well as a definite game-changer!

Pricing:For the first system, we established
$295 for a non-service-plan
customer and $195 for a service-plan
customer (another incentive to being a
“plan” customer!). If there were more
than one system in the residence, we
charged $100 for each additional system,
regardless of whether or not they
were on a plan.

Marketing and promotion: We
used multiple tools, but first, we created
a name for our business — Comfort
Diagnostics.

T.V. Ads: I’ve been a proponent of
T.V. marketing for a long time, but
it’s perfect to market this service.
Why? Because to sell this service,
you must convince consumers that
it’s something they need to have
performed, and there’s nothing
more powerful than delivering an
actual testing video along with your marketing spin on T.V.
We produced a couple of T.V. spots
specific to this testing, including footage
of a camera in use. These camera shots
of air infiltration were like planting
seeds of curiosity in the mind of a homeowner,
in addition to displaying that we had high-tech equipment (blower door,
camera, flow hood, etc.) in hand. We went
from having scattered and sporadic testing
appointments to a significant backlog
shortly after these commercials began
airing.

Website videos: In addition to television,
we added Comfort Institute
videos to our website with one on our
home page and others located deeper
in the website. Our entire staff (inside
and out) was trained to lead consumers
to these videos.
Seeing is believing!

Billboards: We also created a billboard
campaign that we posted when
we knew monthly power bills would be
high either in hot or cold weather. One
of these billboard messages stands out
in my mind – High Power Bill? OMG!
Comfort Diagnostics – Real Solutions!

Gift certificates: Another way to promote
this service, especially if you
wish to assist non-profits with their
fundraising events. Our gift certificate
(a $295 value) was a popular bidding
item, which in turn gave us exposure
to many new customers.

Over the next couple of years, and in addition
to our initial buy-in, we purchased
two additional home-performance packages
(instrumentation) and three infrared
cameras; decreased the price of this
service; and added insulation to our menu
of services because we had the revenue
history to know that the more tests we did,
the better!

Lessons Learned

Some of the important takeaways that
we learned included:
Never give away this service for free.
If it’s free, it’ll probably be viewed as having
little value, which is completely opposite
of its true value. The appointment
schedule for these tests has remained consistently
loaded.

Build in ample time to learn the new
service. We probably spent much more
time than most contractors studying a
new product, as well as practicing commentary
amongst ourselves in order to
sharpen our product knowledge prior
to unveiling Comfort Diagnostics. This
might be viewed as overkill, but experience
told us that getting everyone in our
organization on board was important to
the initial and overall success of this new venture. (In 1999, we spent more than
a year before taking the covers off our
Peaden Signature Series systems —
HVAC equipment, which was the first
of several private-labels. To date, and
to my knowledge, the success of the
Signature Series is unparalleled within
the industry.)

Don’t be put off by the cost.
Regarding our total investment to offer
and upgrade this service over a four-year
span, the costs were relatively significant,
which included the HPC equipment
as well as training, travel for training,
practice time, and marketing. However,
offering Comfort Diagnostics to our
customers, as well as other homeowners,
enhanced our ability to increase our
customer base, including service agreements
(many from our competitors who
don’t offer this service).

In retrospect,
I have no regrets —except maybe one —
that we didn’t do it sooner!
I strongly recommend that you consider
weaving HPC into your business
model to fuel future revenues, profits,
and growth. Don’t be the last company
to climb on board because this testing is
becoming an industry standard.

Robert Wilkos has more than 30 years of senior management experience. He is former business leader for Peaden Air Conditioning, Heating & Plumbing. He is now an independent consultant focusing on healthy growth and long-term long-term prosperity of residential service businesses.

Articles by Robert Wilkos

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